ICICI Securities has formally initiated coverage on Godrej Agrovet (GOAGRO) with a BUY rating, targeting a significant upside for investors. The research report highlights a target price of Rs 980, representing a robust 42% potential increase from the current market price of Rs 688. Over the past twelve to eighteen months, Godrej Agrovet has staged a resilient recovery, driven by astute margin management and strategic advances despite headwinds in volume growth. Forward-looking investors will find this coverage especially pertinent as the company's multi-pronged growth strategy begins to crystalize across core business segments. The narrative suggests that the market has yet to fully price in the inherent momentum and transformational prospects for the next two to three years.

ICICI's Investment Thesis for Godrej Agrovet

ICICI Securities’ buy call is anchored on several structural growth drivers and a notably undervalued stock price. The research forecasts a multi-year upswing fostered by renewed global demand for agri inputs, robust domestic agronomic factors, expanding branded product shares, and operational optimization. Despite a recent 11% dip over the past year, analysts cite compelling upside and urge investors to capitalize on current levels.

Key Investment Rationales

Marked Recovery and Margin Expansion: Godrej Agrovet’s financial performance in FY25 signaled a return to form, with EBITDA rising 16% and net profit surging 19% year-on-year. The advances were chiefly driven by improved realizations, cost efficiencies, and incremental gains in the vegetable oil and dairy segments.
Astec Lifesciences Turnaround:
Astec, a majority-owned subsidiary, had previously dragged consolidated earnings owing to global post-pandemic inventory destocking and demand imbalance. Management now sees a turning point, forecasting EBIT break-even by FY28 driven by new product launches, expanded CDMO capacity, and recovering agri-input demand worldwide.

Domestic Crop Protection and Monsoon Dynamics:
The outlook for India’s crop protection business is buoyed by multiple levers:

Introduction of novel in-licensed and in-house products to offset the sunsetting Hitweed range.

Favorable monsoon and reservoir dynamics setting the stage for a buoyant planting season in FY26.

Large-scale capacity expansion, including a new Dahej plant set for Q4FY26.

Branded Foods and Dairy: Aggressive Premiumization:
The share of branded goods in Godrej Agrovet's dairy and foods segments is forecast to climb sharply—with branded revenue share in foods targeted to reach 80% by FY27. The company is doubling down on value-added products (VAP), cold-chain infrastructure, and strategic marketing investment.

Animal Feed and Vegetable Oil Segments to Accelerate:
Aggressive expansion in logistics and regional capacity, coupled with the commissioning of a new Palm Kernel Oil facility, should underpin double-digit revenue CAGR (FY26–28E) for the animal feed and vegetable oil verticals.

Core Financial Metrics and Targets

Multi-Year Projections: Let's highlight the company's anchor operational targets and investor levels table for perspective:

Stock Levels for Investors:

Current Market Price (CMP): Rs 688

Target Price: Rs 980 (42% upside)

52-week Range: Rs 654 – Rs 876

Valuation and Segment Analysis

SOTP Valuation Underlines Upside Potential: ICICI Securities employs a sum-of-the-parts (SOTP) valuation, applying EV/EBITDA multiples of 12-16x (FY28E segmental earnings), resulting in a composite fair value of Rs 980 per share. This incorporates a holding company discount for Astec, reflecting prudent downside risk management.
Key Segmental Drivers:

Animal Feed: 14.5x EV/EBITDA; value per share Rs 336

Crop Protection: 12.5x EV/EBITDA; value per share Rs 221

Dairy: 12x EV/EBITDA; value per share Rs 70

Vegetable Oil: 15x EV/EBITDA; value per share Rs 268

Astec: Value per share Rs 59 after discounting

Risks and Sensitivities

Upside Triggers: - Above-average monsoons - Reduced competition - Lower commodity input costs - Successful commercialization of new products
Pertinent Risks:

Subpar monsoon or adverse weather patterns

Input cost inflation

Execution risk in branded foods, supply chain or regulatory hurdles impacting livestock products

Strategic Initiatives for Growth

Product Launch Cadence and Capacity Augmentation: Godrej Agrovet has outlined a plan for 5-6 major new product launches in the coming year, embracing in-house R&D as well as partnerships with global innovators. Expansion of manufacturing footprint (notably Dahej for crop care) remains on track.
Palm Oil and Sustainable Agronomy:
The targeted addition of 60,000 hectares in oil palm plantations and strategic investment in “Samadhan” centers (agro-services support) is aimed at solidifying leadership in the sector.

Bottomline: The Final Investment Call

Buy for a Structural Growth Story ICICI Securities asserts that Godrej Agrovet is uniquely poised at the intersection of agribusiness transformation and premiumization in the Indian FMCG/Agri sector. The undervaluation, strong cash flows, and aggressive yet prudent capital deployment strategy collectively argue for a BUY at current levels, with a one-year horizon target price of Rs 980.